U.S. tax chief fired by Obama as IRS scandal deepens

WASHINGTON (Reuters) - Washington's top tax official was fired on Wednesday as President Barack Obama sought to stem a rising tide of criticism over the Internal Revenue Service's targeting of conservative groups for special scrutiny.

Seeking to regain the initiative amid a series of controversies that have threatened his second-term agenda, Obama said new leadership was needed to restore public confidence in the IRS, whose reputation for political independence has suffered a major blow.

Obama said he had told his Treasury Secretary, Jack Lew, to seek the resignation of Steven Miller, the acting IRS commissioner, and Lew had done so.

"I will do everything in my power to make sure nothing like this happens again," Obama told reporters at the White House.

Obama spoke after meeting senior Treasury officials on how to quell the growing uproar after a government watchdog described how poor management led to an "inappropriate" focus on claims by conservative groups for tax-exempt status.

The Democratic president, who had been accused by Republican critics of reacting too passively to the scandal, called the misconduct "inexcusable."

"I am angry about it," he said.

He promised to work "hand in hand" with Congress to put in place new safeguards but, acknowledging the realities of a divided Washington, urged lawmakers to deal with the delicate issue in a way that does not "smack of politics or partisan agendas."

Obama's announcement also followed stepped-up calls from Republican lawmakers for Miller and other top IRS officials to resign.

Miller said in a message to colleagues that there is a "strong and immediate need" to restore public trust in the nation's tax agency.

"It is with regret that I will be departing from the IRS as my acting assignment ends in early June," Miller wrote. "This has been an incredibly difficult time for the IRS given the events of the past few days.

Earlier on Wednesday, CNN quoted a congressional source as saying Miller had said the IRS had pinpointed two "rogue" employees in the agency's Cincinnati, Ohio, office as being principally responsible for "overly aggressive" reviews of requests for tax-exempt status by groups associated with the conservative Tea Party movement.

The IRS revelations have added to a sense of a White House under siege and a president struggling to gain control of fast-moving events.

Republicans continue to bash the administration's handling of the attack last year on the U.S. mission in Benghazi, Libya. And on Monday, the Justice Department came under fire for seizing phone records of journalists from the Associated Press as part of a criminal probe into intelligence leaks.

The Justice Department has launched a criminal probe of the IRS, and on Wednesday a third congressional committee announced that it would begin its own investigation.